Union Central Life Ins. Co. v. Kerron

• Decision Date: 28 February 1928
• Citation: 128 Or. 70,264 P. 453
• Parties: UNION CENTRAL LIFE INS. CO. v. KERRON ET AL.
• Court: Oregon Supreme Court

264 P. 453

128 Or. 70

UNION CENTRAL LIFE INS. CO. v. KERRON ET AL.

Supreme Court of Oregon

February 28, 1928

Department 1.

Appeal from Circuit Court, Washington County; George R. Bagley Judge.

Suit by the Union Central Life Insurance Company against William Kerron, John F. Kaufman, and others to foreclose a mortgage. From a decree dismissing the complaint, plaintiff and defendant Kaufman appeal. Reversed and rendered.

This is an appeal from a decree dismissing the complaint in a suit brought to foreclose a mortgage for $12,000, with interest at 6 per cent. per annum, executed by defendant Wm. Kerron on August 28, 1917.

Union Central Life Insurance Company, plaintiff herein, conducted a loan business in the state of Oregon; defendant John F Kaufman being in charge of same. Defendant Wm. Kerron owned and resided on a farm in Washington county, Or., consisting of 217.54 acres of choice agricultural land. Being desirous of making a loan of $11,000, Kerron advertised the fact in a Portland paper. The advertisement came to the notice of one A. W. Payne, a loan broker of Portland, Or., who, on August 2, 1917, wrote Kerron as follows:

"We have this amount to loan at 6 per cent. per annum, if the conditions are as represented by Mr. Farrington."

On August 7th Payne again wrote as follows:

"Will you accept $12,000 instead of $11,000? I find we prefer to lend the former amount."

On August 10th Kerron filed with Payne an application for a loan of $12,000, with interest at 6 per cent. per annum, payable semiannually, wherein he represented that his farm, offered as security, exclusive of buildings, fences, and improvements, was of the cash value of $45,000, and that its total value was $50,400. The application concluded with the following:

"I also agree to pay you the sum of $240 as commission for your services in negotiating this loan."

Thereafter Payne took Kaufman, plaintiff's agent, to the Kerron farm, and introduced him to defendant Kerron. Kaufman looked over the farm offered as security, explained to Kerron the terms of the loan, and gave him a circular in which were set out the terms and conditions under which loans were made. This circular having been lost, similar circulars were offered in evidence, some of which expressly state that no commissions will be charged, and that the only expense to the borrower will be for abstract of title and recordation of the mortgage. Following the representations made to Kerron by Kaufman, Kerron made application to the plaintiff for a loan of $12,000 on the amortization plan, payable in 20 payments. This application shows the amount of liens upon the land at the time of the application, and the amount that would be on the land in the event that the loan was made, "plus one per cent. commission on mortgage to Agricultural Credit Corporation of Oregon." In the course of time, the plaintiff decided to make the loan, and, through defendant Kaufman, its agent, advised defendant Kerron of that fact. When Kerron appeared at Kaufman's office to execute the papers, the mortgage and the several notes were all prepared and lying on the table, ready for his signature. Kerron asserts that he suffers from defective eyesight, and is unable to read without glasses; that on the day he went to Kaufman's office to look after the loan, he had forgotten his glasses, but did not discover the fact until he had sat down at the table to sign the papers, and that, being unable to read the mortgage and notes, he depended upon plaintiff's agent for information as to their contents. Kerron asserts that, relying upon the representations of Kaufman, he not only signed the mortgage running to plaintiff, together with the 21 notes secured thereby, but that he also signed a second mortgage and notes, made payable to the Agricultural Credit Corporation of Oregon, to the amount of $1,538.38.

He further avers that, at the time he executed the notes and mortgage in favor of the Agricultural Credit Corporation, he neither knew nor understood that there was a second mortgage or any other mortgage or notes, executed by him, except the mortgage and notes to the plaintiff above described, and that, relying upon the representations of plaintiff's agent, he was deceived and misled, and that he signed the note and mortgage in favor of the Agricultural Credit Corporation without intending so to do, and in complete ignorance thereof.

On the other hand, the plaintiff contends that Kerron executed the mortgage referred to and the notes secured thereby with full knowledge of their contents, and without misrepresentations on the part of Kaufman, and that, up to a short time prior to the commencement of the foreclosure suit, Kerron at no time made any protest or claims to the holders of the mortgage that the instrument was executed without full knowledge on his part of its contents, or under any misrepresentation, and that Kerron is now estopped from escaping liability thereunder.

From a decree in favor of defendant Kerron, the Union Central Life Insurance Company, a corporation, plaintiff herein, and John F. Kaufman, one of the defendants, appeal.

Milton W. Smith, of Portland, and Thos. H. Tongue, Jr., of Hillsboro, for respondents.

BROWN J. (after stating the facts as above).

The law of this case is well settled. When an injured party has capacity to read a written contract signed by him, and has an opportunity to do so, if no fraud is practiced upon him to prevent him from reading such writing, and he chooses to rely upon what another says it contains, without requesting that it be read, he is estopped by his own negligence from claiming that he is not bound by its terms. Lovell v Potts, 112 Or. 538, 207 P. 1006, 226 P. 1111, and cases there cited. On the other hand, if false representations are made and relied on by another, or undue influence is practiced in obtaining a signature to a writing, it is not binding on the person so signing, although he did not read it or request that it be read to him. See note, 32 Am. St. Rep. 384. However, false representations, to constitute fraud, as the term is used herein, must be such representations as will deceive a person of ordinary prudence. Wheelwright v. Vanderbilt, 69 Or. 326, 138 P. 857.

It is asserted, in substance, that the plaintiff cannot be held for a wrong committed by its agent. This contention is untenable, because it is well settled that one who with knowledge of the facts accepts the benefit of an act done by one acting as agent ratifies the act, and makes it his own. Schreyer v. Turner Flouring Co., 29 Or. 1, 43 P. 719; Grover v. Hawthorne Estate, 62 Or. 77, 114 P. 472, 121 P. 808; Alder Slope Ditch Co. v. Moonshine Ditch Co., 90 Or. 385, 176 P. 593; Scandinavian-American Bank v. Wentworth Lbr. Co., 101 Or. 151, 199 P. 624; Smith v. Mills, 112 Or. 496, 230 P. 350; Mechem on Agency, § 148.

The plaintiff asserts that Kerron has mistaken his remedy. We think that contention is put at rest by the opinion of this court in the case of Everson v. Haun, 106 Or. 612, 213 P. 135, where Mr. Chief Justice McBride, speaking for the court, wrote:

"The arm of equity is long. It will not reach half way to do half equity when whole equity can just as easily be grasped. * * * Nobody has ever yet defined the limits of equity and nobody ever will. It takes a case as a whole and, having obtained jurisdiction in the first place, it proceeds to administer complete relief by whatever means that relief may be achieved."

The plaintiff summoned Kerron into a court of equity, and the court will not deny him relief if he is entitled thereto.

Has Kerron waived the alleged fraudulent acts of Kaufman, if he be guilty of fraud? If Kerron's testimony is entitled to full credence, we think not. Waiver must be manifested in some unequivocal manner; and, to operate as ratification, it must be intentional. McCabe v. Kelleher, 90 Or. 45, 175 P. 608. It does not appear from the record that the plaintiff's right has been impaired because of Kerron's delay in denying that he knowingly signed the second mortgage and the notes secured thereby.

To determine whether Kaufman or Kerron is telling the whole truth is the difficult question in this case. The papers were prepared by or under the direction of Kaufman, plaintiff's agent, and, when Kerron arrived at Kaufman's office, they were lying on the table ready for his signature. Kerron is an elderly man, and, according to his testimony, is unable to read without the assistance of his spectacles. He testified that, at the time he signed the mortgage and notes involved herein, he relied upon Kaufman's representations as to their contents; that he believed in Kaufman, and accepted his representations as true. Although Kerron signed twenty-six notes, and signed and acknowledged the execution of two mortgages, his testimony is, in effect, that the only papers he purposely signed were the mortgage for $12,000 and the 21 promissory notes secured thereby.

Kaufman denied the testimony of Kerron, and swore that Kerron knew what he was signing, and he gave further evidence concerning Kerron's conduct subsequent thereto with reference to making payments upon the first and second mortgages that tends to show that Kerron knew that he had made and executed both instruments and the promissory notes secured by each of them.

In support of Kerron's testimony is that of his son, Harry Kerron, who testified that he made most of the payments upon both the first and second mortgages for his father; that his father was hard pressed for money; and that he came to his rescue, and made the payments without any knowledge or information concerning the second mortgage. As to his manner of making the payments, he testified:

"I paid only as Mr. Kaufman would make up

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